Math & Statistics

What Is a Percentage Point?

A percentage point is the unit for the arithmetic difference between two percentages. If a rate rises from 4% to 6%, it has increased by 2 percentage points — which is a 50% increase in relative terms. The distinction matters for interest rates, tax rates, and statistics.

Basis Points

In finance, one basis point is one hundredth of a percentage point (0.01%), so 25 basis points equals 0.25 percentage points.

Example With Interest Rates

If a loan rate moves from 5% to 5.5%, it has risen by 0.5 percentage points, or 50 basis points, which is a 10% relative increase. Headlines often use percentage points to avoid confusion between these two ways of describing the same change.

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🔗 Related Terms

Percentage Percentage Change Interest Rate

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.